Monday, 24 November 2008

Hey Hey, it’s Pre-Budget Report Day!

I have a distinctive recollection of what I felt, sitting in the big auditorium at last month’s Tory Conference, as George Osborne made that indigestive ‘grave’ face of his and asserted that Cameron’s (and his) Tory Party was committed to the principle of ‘sound money.’ I was thinking this was a very old-fashioned tune for a moderniser to be singing, but that presumably its cadences would delight the Tory faithful, and also play well on the news during a week when money, like many other allegedly solid objects, looked to be melting into air.This week that tune is sounding creakier still, and yet at the same time no more ancient than the regime of John Major, when any weakness in sterling was held to be a mortal sin and a national disgrace. Today the present weakness of sterling is generally reckoned to be a necessary evil, per the Bank of England’s swingeing rate cuts. A weak pound offers a road to salvation. The Tories as a party seem to find this proposition terminally indigestible.That Conference week, of course, was the last encouraging one (to date) that the Tories have enjoyed this Autumn, and even that was a rather nervy and rain-soaked affair that got pushed off the front pages by other Events. Today, incredibly, finds Brown and Darling riding a (shaky, treacherous) wave of momentum. ‘It is all very odd’, says today’s FT leader. ‘Here is a Labour government wanting to cut taxes, and a Conservative opposition braying nay… The government is taking a gamble but, on the face of it, it looks like the Tory gambit is riskier.’I don’t believe Cameron believed any of this before his poll lead took a bashing… but it seems he’s now prepared to argue only for ‘fully funded’ tax cuts. Who can afford to wait around for that day that never comes? Meanwhile the Darling/Brown prescription seems to be a short, sharp fiscal stimulus to boost consumption (a cut in VAT, more income tax ‘allowance’ for the lower paid.) The sceptics will naturally ask what provisions this newly whizkid-like PM and Chancellor are making for our pathway back to fiscal prudence. As the Sun and many others are warning today, we the people are going to pay for all of this, fairly soon too. It’s all a bit too dramatic, really; a good job that it’s only our lives and livelihoods that are at risk here.